-LRB- CNN -RRB- -- Europe needs to cut back on its red tape and be more competitive if it is to succeed on a global stage , according to Diageo 's chief executive .

Paul Walsh , boss of the world 's largest spirits producer , told CNN : `` We have to have less regulation and more focus on a competitive edge . Europe is becoming less competitive in the global scene . ''

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Britain also needs to reforge its relationship with the European Union , he added . However , this should not necessarily be thrashed out through an `` in-or-out '' referendum as proposed by British Prime Minister David Cameron .

`` As a businessman I would have preferred a much more authoritarian approach , '' he joked , `` but I suspect that politicians are deprived of that ability . ''

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He added : `` I think we should do everything in our power to stay in the EU , and that means inevitably some kind of compromise . ''

Diageo posted a 5 % rise in sales growth for the second half of last year , despite a decline in European sales . Southern Europe was particularly hard hit , suffering a 19 % fall in sales as the financial crisis continued to bite .

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`` Europe continues to become a smaller piece of the overall pie , '' said Walsh , who is focusing on faster growth markets , such as Latin America , Africa and Asia .

Recent acquisitions for London-based Diageo have included ShuiJingFang , a maker of baijiu , a Chinese white spirit , as well as Mey Icki , in Turkey . Diageo is in the process of acquiring a majority stake in United Spirits , India 's largest spirits company .

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Growth in these emerging markets is offsetting declines in Europe , but Diageo 's home markets are still vital .

`` We have to do a far better job in educating our population on the imperative of staying in Europe , '' said Walsh . `` I do n't believe that task should just be left to the politicians , business too have to stand up . ''

Diageo wo n't be putting any pro-Europe stickers on their bottles ; Walsh believes the educating should start within the business itself .

`` We need to engage first and foremost with our employees , '' Walsh said . He added the company should `` explain to them that many of these brands enjoy their place in the global marketplace because of free trade agreements that are configured via Europe . ''

CNN 's Anna Stewart contributed to this article

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Diageo posted a 5 % rise in sales growth for the second half of last year

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Recent acquisitions for Diageo have included ShuiJingFang , a maker of baijiu

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London-based Diageo wo n't be putting any pro-Europe stickers on their bottles